Time for the Bunker Industry to Get its Ship in Order

by Steve Leonard, VP of Business Development, ClearLynx LLC
Wednesday July 27, 2016

In an interview last May with ShippingWatch, Robin Meech, the chairman of the International Bunker Industry Association (IBIA), spoke about the need to eradicate - or at least reduce - the perception that the bunker industry is a business where "irregular practices are common, cheating is not an unexpected element of the business and is acceptable as a means to remain competitive."

When he gave these comments, Mr. Meech had just taken over the chairmanship at IBIA and sought to outline the significant challenges facing the industry in the post OW era and the looming 2020 global sulphur cap. Putting these concerns aside, however, Mr. Meech did not mince words: business ethics was at the top of the list. He underscored his case using a survey that showed "94% of the association's members stated that ethical behavior and standards have become a top priority."

While historically suppliers have been the focus of what Mr. Meech referred to as "systematized under-delivery" more attention is now directed at the traders partly the result of OW where a rogue trader's actions contributed mightily to the company's ultimate demise. Add to this the onslaught of court rulings that have turned the traditional maritime lien assumption on its head and one appreciates why suppliers and buyers are reassessing every counterparty's role.

As if we needed another reminder, we were greeted this week with a lengthy email narrative describing in rather intricate detail how some very recognizable traders and suppliers have been colluding in India, Dubai, and Fujairah. Blame it on a long hot summer, a disgruntled employee, or a whistle-blower - the incident brought to life yet again, just how so much continues to go astray in our industry.

Whether this story was true or not misses the point: it restated the biases, the inefficiencies and the hidden agendas promulgating the long-held belief that our industry is saddled with deception and calculated undertones. The damage was done setting back efforts by those who are trying to clean up the industry. As Henry Kissinger used to say, "... corrupt politicians make the other ten percent look bad."

IBIA describes itself as the "voice of suppliers and end-users of marine fuel" while providing an international forum for bunker industry issues. Acting as the de-facto representative body, IBIA supports "the industry in discussion and negotiations with international policy makers while offering to clarify, improve, develop and endorse industry methods, practices and documentations."

As stakeholders in the bunker supply chain, we all need to do more to support Mr. Meech and IBIA's efforts to clean up the industry. We must act on his recognition that "trust in the sector suffered a major setback after the collapse of OW [and] many incidents have increased the distrust between buyer and seller, an element that was less pronounced before."

While many other industries are becoming open and all-encompassing, the marine fuel business remains sheltered and conventional. It is not always easy to define the boundaries of a partnership and the respective roles of the partners, but it is imperative that we make every effort to better ourselves at this critical juncture.

With that in mind, and at the risk of being characterized as self-serving, we at ClearLynx are doing our part with a neutral online fuel procurement platform that creates more visibility and efficiency in the procurement process. How? It's simple: we have addressed particular user pain points for buyers, we believe we have solved them, and in so doing, made the experience easy.  It is your basic lesson 101 in product development in the 'real world' where being a digital native is not a sin.

An open and competitive landscape free of the legacies and structures should and will facilitate innovation that will ultimately translate into eliminating the industry's perceptions that IBIA is working to correct.

It's up to all of us to get our ship in order.